- Treasurer to address Pacific Banking Forum
- Continued banking presence in Australia is crucial
The Albanian government has called on major Australian banks to continue operating in Pacific countries, amid fears that withdrawing services would allow China to expand its influence in the region.
The importance of continued activity and multilateral cooperation between Australia and the Pacific will be emphasised by Finance Minister Jim Chalmers in his address to the Pacific Banking Forum on Tuesday, as he calls on the private sector to play its part.
“We know how important these services are to local communities,” he will say.
‘That’s why we’ve been actively engaging with all the major Australian banks to let them know how important it is to the government that Australian banks continue to have a presence in the region.’
He made his comments at a time when Pacific countries are facing the fastest banking withdrawal in the world, leaving their banks and people without access to cross-border payment services, global financial systems and funding for essential projects.
Workers in Australia are also unable to send money to their home country.
This has led to fears of growing influence by the Chinese Communist Party. The state-owned bank has already indicated it wants to operate throughout Papua New Guinea, after opening a branch in the capital, Port Moresby.
Dr. Chalmers will also announce a $6.3 million funding increase to improve systems and law enforcement processes to ensure banks remain motivated to continue operating.
Finance Minister Jim Chalmers will urge major Australian banks to keep their branches open
The funding is divided across three initiatives: $2.9 million to the World Bank to help develop an inclusive and secure digital identity infrastructure, $1.7 million to the Asian Development Bank to improve compliance with anti-money laundering and countering the financing of terrorism requirements, and $1.7 million to support criminal justice and law enforcement, which will be managed by the Department of Justice.
He outlined five goals for Australia, including a commitment to reverse declining service delivery, ease direct pressure on local institutions, attract new private investment into markets and improve integrity metrics to increase market confidence.
“Ensuring that all Pacific countries have access to safe, reliable and stable banking services is one of Australia’s highest priorities in the region,” Dr Chalmers said.
“You can count on Australia to work with you to keep the Pacific region connected to the global financial system.”
Dr Chalmers will also announce on Tuesday that he will attend the Pacific Islands Forum Economic Ministers’ Meeting in Suva, Fiji, in August, where he will update ministers on progress to date.
On Monday, ANZ chief executive Shayne Elliott said it was difficult and risky for banks to operate in the Pacific region due to smaller economies and business conditions.
There are concerns that Australia’s continued withdrawal of banking services could allow China to expand its influence in the Pacific region (stock image)
ANZ has the largest reach of any Australian bank in the region, with 19 branches. However, excluding Papua New Guinea, the bank has closed 10 branches in the past five years.
In 2022, the country also left American Samoa and Guam.
“Each country has its own laws, regulations, customs and taxes. While it is important for each country to chart its own course, this can create costs for companies that want to operate in the region,” he said.
He said banks would be able to operate more easily if Pacific countries adopted common laws, implemented “consistent regulations” and improved “regional approaches to financial crime”.
“High-cost, high-risk countries that don’t offer scale have become less attractive for banks to serve,” he said.
“While the Pacific is not the only area facing this challenge, it is one that is being hit hard by it.”
